Aadhaar can reduce digital transaction cost to almost nil: NITI Aayog

The cost of digital transactions could be reduced to almost zero if payments were made through Aadhaar Card, NITI Aayog CEO Amitabh Kant said on Wednesday.

"Mobile telephony with Aadhaar, when it is linked with bank account... Aadhaar to Aadhaar transactions, like with BHIM app, the cost of transaction is zero," Kant said during a panel discussion at a conclave on financial inclusion organised here by the United Nations India chapter.

Aadhaar payment could reduce the transaction cost greatly compared with card payments, the National Institution for Transforming India (NITI) Aayog official said.

Transaction cost on payments made by credit cards stand at 3.5 per cent while payments through debit cards attract 1.25-1.50 per cent transaction charges.

Ashok Pal Singh, CEO, India Post Payment Bank, said that along with simplification of digital payment, the challenge was to make it affordable as well.

"The challenge is how do we make Rs 10 digital payment viable. Aadhaar authentication cost is very reasonable. Payment transaction using Aadhaar should be able to cost the same... almost zero," Singh said.

"India Post Payments Bank envisions the conversion of every Aadhar Card into a payment account. It was established to ensure financial inclusion," he added.

R.S. Sharma, Chairperson, Telecom Regulatory Authority of India, said the removal of transaction costs could really push up digital payments.

"All transactions based on Aadhaar Card will enable a customer have credit history which will help under-served to avail of loans," Sharma said.

He said India has an advantage as no other country has the kind of digital infrastructure it has.

"If we are not using the technology we are losing out on the opportunity," he added.

Talking on the issue of data security of Aadhaar Cards, Sharma said mobile phones gave out much more private data to corporate firms.

"Mobile phone is more dangerous than Aadhaar. It emits so much meta data like location etc, which is given out to companies and not the government. This data is huge. There are issues of data ownership in mobile phone sector. Security is important. Sooner this issue is tackled the better it is," he said.

Unique Identification Authority of IndiaA (UIDAI) CEO Ajay Bhushan Pandey said that people should not fear threat to privacy as Aadhaar was a secure way of providing identification along with strong safeguards.

As many as 117 crore people were already enrolled for Aadhaar Cards and four lakh people were being added each day, he said.

"With the infrastructure, digital payment transactions hold great scope for India to leapfrog into the new realm," Pandey said.

The government has kept a deadline of December 31 for all bank accounts to be linked to Aadhaar. It has also been mandated to link all mobile numbers with Aadhaar by February 2018.

The Supreme Court on August 24 had declared the Right to Privacy as a Fundamental Right guaranteed by the Indian Constitution, a ruling that could have a bearing on the case related to Aadhaar that has been made mandatory for various services.

Aadhaar number would thus have to stand the test of constitutionality as the Supreme Court's decision on the legislation is pending.

The Aadhaar (Targeted Delivery of Financial and other Subsidies, Benefits and Services) Act, which aims to provide legal backing to the Aadhaar unique identification number project, was passed in 2016 by Parliament.